RAIL PLAN HEADED FOR LEGAL CLASH

the largest public works project in the state’s history — heads to a high-stakes showdown in court today.

A Sacramento County Superior Court judge is scheduled to hear arguments in a lawsuit that claims the project doesn’t comply with a statewide ballot measure approving $9.9 billion in bonds for the systems.

Since passage of Proposition 1A in 2008, expected costs for high-speed rail have increased significantly while polls show waning support.

The lawsuit was brought two years ago on behalf of farmer John Tos, rural homeowner Aaron Fukuda and Kings County, which has locked horns with bullet-train officials over planning of the system.

Attorneys Michael Brady and Stuart Flashman, representing Kings County, allege that the high-speed system violates numerous aspects of Proposition 1A, including requirements that the state have all funding and environmental approvals in place for an initial phase prior to starting construction.

Brady and Flashman said the measure included an elaborate set of requirements to protect taxpayers from funding a money-loser.

“By ignoring the statutory requirements, the authority has set in motion a project likely to become incomplete and stranded,” they argued in advance of the hearing.

Work on the project, which would eventually connect the state’s population centers with trains traveling at 220 miles per hour, is scheduled to begin this summer.

The plaintiffs say if Judge Michael Kenny rules the authority did not comply with the proposition, the next step would be to invalidate the funding plan and about $8 billion in appropriations.

“That would block the expenditure of high-speed rail bond funds and bring the authority’s project to an abrupt halt,” they said.

Although arguments are scheduled in court today, an immediate ruling is not expected.

The state attorney general’s office, representing the California High-Speed Rail Authority, contends that rail plans address all legal requirements, except that the authority certify all project-level environmental clearances. The state’s legislative counsel found that any defect in satisfying that requirement did not limit the Legislature’s authority to appropriate the funds.

“In other words, the Legislative Counsel concluded that the only consequence of the authority’s failure to certify that it had all project-level clearances for the (initial construction section) is that the Legislature might choose not to fund the requested appropriation,” the state says in its brief.

State lawmakers approved spending for high-speed rail last summer. The push came amid threats from federal officials to withdraw $3.3 billion in stimulus funds and hand it over to other states.

State bullet-train officials have settled other lawsuits relating to environmental certification. The fight over high-speed rail bonds is regarded as among the most pressing impediments.

“The environmental situation is a mess — just like the Legislature thought it would be, unless the authority did all this stuff and got their ducks in order many, many, many months ago,” Brady said.

The plaintiff’s attorney also said the authority failed to identify committed or secured funds for an initial segment from Merced to the Los Angeles Basin in the San Fernando Valley, as is required.

“They are well short of what they need,” Brady said. “And what do they say? ‘Let us build it; and once we build it, people will see how wonderful it is and all sorts of people will say they want to invest.’

“Well, Proposition 1A doesn’t permit what we call such aspirational showings: ‘I hope that this will happen, but I don’t have it right now. It’s on the come,’ ” Brady said.

The state maintains there is no provision in the bond act requiring a funding plan to identify money in place, or even reasonably likely to be in place, to build an entire usable segment or corridor.

“Tos (the farmer) may prefer that the authority invest bond funds only when funds to complete an entire usable segment are in hand, but this is not what the bond act requires, nor would it be a practical approach to building a project,” the state says in its brief. “The finding plan only requires identification of expected funding sources.”

Rail officials did not respond to a request for comment on the case. Dan Richard, the chairman of the high-speed rail authority, warned at a congressional hearing Tuesday that the final cost for the project could increase from $68 billion.

The price at one point was pegged at $98 billion, causing an uproar, and was scaled back with a plan to share upgraded rail networks along parts of the route.

Former Sen. Quentin Kopp, involved in planning high-speed rail since 1992, states in an expert declaration in the case that the so-called “blended” system forcing the bullet train and standard rail to share tracks from San Francisco to San Jose is not genuine high-speed rail.

“Instead, it has been distorted in a way directly contrary to the high speed rail plan the authority attempted to implement while I was chairman, namely, a true HSR system containing all the features, terms and protections desired by the Legislature and honoring restrictions placed upon use of Proposition 1A bond proceeds by the Legislature,” he said. “Accordingly, it is my opinion the project is not lawfully eligible to receive Proposition 1A bond funds.”

Meanwhile, the authority plans to approve a $985 million contract at its meeting next month with Southern California-based Tutor Perini Corp. Critics of the project have raised questions about the methodology the authority relied on to select the team to design and build the first 29-mile stretch of track connecting Madera and Fresno.

Tutor Perini Corp. of Sylmar, Zachry Construction Corp. of Texas and Parsons Corp. of Pasadena bested other bidders with its low bid in terms of cost, although its technical score was the lowest among finalists. Based on previous litigation, critics say the state may be setting itself up for future cost overruns.

At the hearing this week in Madera, Rep. Jeff Denham, R-Atwater, said he remained skeptical about plans to soon break ground in the Central Valley. Denham, chairman of the House subcommittee on Railroads, Pipelines and Hazardous Materials, said he was troubled by escalating costs and the effect on homes, farms and businesses along the route.

Denham, who wants to see more private investment, said voters were told the statewide bullet train would cost $33 billion and begin operating in 2020. Costs have more than doubled and the start date has been pushed back by some eight years. He also said it’s unclear to him, given all the changes since 2008, whether the project conforms to Proposition 1A.

Richard downplayed the expectation of more private investment at this juncture.

“The private sector will want to see a proven revenue stream from a completed project before their willingness to invest,” Richard said.

He added that there were plenty of opportunities down the road for generating additional revenue.

Other claims in the case scheduled to be taken up at a later date concern subsidies, ridership, costs, revenues and the promise that riders would get from San Francisco to Los Angeles in 2 hours, 40 minutes.